Turkey’s gaping current account deficit has long marred the country's economic credibility, but new figures suggest that time may be passing. In the government’s midterm economic program, the 2014 year-end current account deficit was projected at $55 billion, or 6.4% of gross national product (GNP), but the results so far are even better, indicating that that target will be surpassed. Optimism is rising that the year-end current account deficit will be around $50 billion or even lower, or less than 6% of GNP.

Last year, the deficit reached $65 billion, or 7.8% of GNP, far above the levels in other emerging economies: 6.7% in South Africa, 4.3% in India, 3.9% in Chile and 3.5% in Brazil. As a result, tackling the gap became an urgent concern. In remarks in March, Deputy Prime Minister Ali Babacan, who oversees the economy, declared that “reducing the current account deficit is the number one priority,” stressing that Turkey's manageable current account deficit/GNP ratio was 4-5%.

The May current account deficit stood at $3.4 billion, well below the market's expectation of $4 billion, according to Central Bank figures revealed July 11. Thus, the current account deficit for the first five months of the year reached $19.8 billion, down $12.4 billion from the same period last year. On a 12-month basis, the deficit fell from $65 billion to $52.6 billion, indicating that the government’s year-end target of $55 billion has already been surpassed. The reduction of the current account deficit owes much to a similar improvement in the foreign trade deficit, which decreased by $10.8 billion to $22.7 billion in May thanks to rising exports.

According to the Central Bank, Turkey exported $719 million worth of gold in the first five months of the year, in contrast with gold imports worth $5.23 billion during the same period last year. The shift from imports to exports in gold has emerged as a major factor in narrowing the current account deficit.